Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of July 13,
2005, is by and among Valence Technology, Inc., a Delaware corporation, with
headquarters located at 0000 Xxxxxx Xxxxx Xxxxxxx, Xxxxxx, Xxxxx 00000 (the
"COMPANY"), and the undersigned lenders (each, a "Lender" and collectively, the
"LENDERS").
RECITALS
A. In connection with the Loan Agreement by and among the parties hereto of
even date herewith (the "LOAN AGREEMENT"), the Company has agreed, upon the
terms and subject to the conditions of the Loan Agreement, to issue and
sell to the Lenders warrants (the "WARRANTS") to purchase up to 600,000
shares of Common Stock of the Company (the "Warrant Shares").
B. To induce the Lenders to execute and deliver the Loan Agreement, the
Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933
Act"), and applicable state securities laws.
AGREEMENT
In consideration of the premises and the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and each of the Lenders hereby agree as
follows:
1. DEFINITIONS. As used in this Agreement, in addition to terms elsewhere
defined herein, the following terms shall have the following meanings:
(a) "BUSINESS DAY" means any day other than Saturday, Sunday or any other
day on which commercial banks in the City of New York are authorized
or required by law to remain closed.
(b) "INVESTOR" means a Lender, any transferee or assignee thereof to whom
a Lender assigns its rights under this Agreement and who agrees to
become bound by the provisions of this Agreement in accordance with
Section 9 and any transferee or assignee thereof to whom a transferee
or assignee assigns its rights under this Agreement and who agrees to
become bound by the provisions of this Agreement in accordance with
Section 9.
(c) "PERSON" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an
unincorporated organization or governmental or any department or
agency thereof.
(d) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
effected by preparing and filing one or more Registration Statements
(as defined below) in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act or any successor rule providing for
offering securities on a continuous or delayed basis ("RULE 415"), and
the declaration or ordering
of effectiveness of such Registration Statement(s) by the United
States Securities and Exchange Commission (the "SEC").
(e) "REGISTRABLE SECURITIES" means (i) the Warrant Shares issued or
issuable upon exercise of the Warrants and (ii) any shares of capital
stock issued or issuable with respect to the Warrant Shares or the
Warrants as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise.
(f) "REGISTRATION STATEMENT" means a registration statement or
registration statements of the Company filed under the 1933 Act
covering the Registrable Securities.
(g) Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Loan Agreement.
2. REGISTRATION.
(a) Mandatory Registration. The Company shall prepare, and, as soon as
practicable but in no event later than 45 days after the Closing Date
(the "FILING DEADLINE"), file with the SEC a Registration Statement on
Form S-3 covering the resale of all of the Registrable Securities. In
the event that Form S-3 is unavailable for such a registration, the
Company shall use such other form as is available for such a
registration, subject to the provisions of Section 2(c). The Company
shall use its reasonable best efforts to have the initial Registration
Statement declared effective by the SEC as soon as practicable, but in
no event later than the date which is (i) in the event that the
Registration Statement is not subject to a full review by the SEC, 90
days after the Closing Date or (ii) in the event that the Registration
Statement is subject to a full review by the SEC, 135 days after the
Closing Date (the "EFFECTIVENESS DEADLINE").
(b) LEGAL COUNSEL. Subject to Section 5 hereof, the Lenders holding at
least a majority of the Registrable Securities shall have the right to
select one legal counsel to review and oversee any offering pursuant
to this Section 2 ("LEGAL COUNSEL"), which shall be Xxxxxx Xxxxxx
Rosenman LLP or such other counsel as thereafter designated by the
holders of a majority of the Registrable Securities.
(c) INELIGIBILITY FOR FORM S-3. In the event that Form S-3 is not
available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the
Registrable Securities on another appropriate form reasonably
acceptable to the holders of a majority of the Registrable Securities
and (ii) undertake to register the Registrable Securities on Form S-3
as soon as such form is available, provided that the Company shall
maintain the effectiveness of the Registration Statement then in
effect until such time as a Registration Statement on Form S-3
covering the Registrable Securities has been declared effective by the
SEC.
3. RELATED OBLIGATIONS. At such time as the Company is obligated to file a
Registration Statement with the SEC pursuant to Section 2(a), the Company
will use its reasonable best efforts to effect the registration of the
Registrable Securities in accordance with the intended method of
disposition thereof and, pursuant thereto, the Company shall have the
following obligations:
(a) The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities (but
in no event later than the applicable Filing Deadline) and use its
reasonable best efforts to cause such Registration Statement relating
to the Registrable Securities to become effective as soon as
practicable after such filing (but in no event later than the
Effectiveness Deadline). The Company shall keep each Registration
Statement effective pursuant to Rule 415 at all times until the
earlier of (i) the date as of which the Investors may sell all of the
Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or successor thereto) promulgated
under the 1933 Act or (ii) the date on which the Investors shall have
sold all the Registrable Securities covered by such Registration
Statement (the "REGISTRATION PERIOD"), which Registration Statement
(including any amendments or supplements thereto and prospectuses
contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein, in the light of
the circumstances in which they were made, not misleading. The term
"reasonable best efforts" shall mean, among other things, that the
Company shall submit to the SEC, within two Business Days after the
Company learns that no review of a particular Registration Statement
will be made by the staff of the SEC or that the staff has no further
comments on the Registration Statement, as the case may be, and the
approval of Legal Counsel pursuant to Section 3(c), a request for
acceleration of effectiveness of such Registration Statement to a time
and date not later than 48 hours after the submission of such request.
(b) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection with such
Registration Statement, which prospectus is to be filed pursuant to
Rule 424 promulgated under the 1933 Act, as may be necessary to keep
such Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the
provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by such Registration
Statement until such time as all of such Registrable Securities shall
have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such
Registration Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this
Agreement (including pursuant to this Section 3(b)) by reason of the
Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any
analogous report under the Securities Exchange Act of 1934, as amended
(the "1934 ACT"), the Company shall have incorporated such report by
reference into the Registration Statement, if applicable, or shall
file such amendments or supplements with the SEC on the same day on
which the 1934 Act report is filed which created the requirement for
the Company to amend or supplement the Registration Statement.
(c) The Company shall (A) permit Legal Counsel to review and comment upon
(i) the Registration Statement at least two Business Days prior to its
filing with the SEC and (ii) all other Registration Statements and all
amendments and supplements to all Registration Statements (except for
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K and any similar or successor reports)
within a reasonable number of days prior to their filing with the SEC,
and (B) not file any Registration Statement or amendment or supplement
thereto in a form to which Legal Counsel reasonably objects. The
Company shall not submit a request for acceleration of the
effectiveness of a Registration Statement or any amendment or
supplement thereto without the prior approval of Legal Counsel,
which consent shall not be unreasonably withheld. The Company shall
furnish to Legal Counsel, without charge, (i) copies of any
correspondence from the SEC or the staff of the SEC to the Company or
its representatives relating to any Registration Statement, (ii)
promptly after the same is prepared and filed with the SEC, one copy
of any Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein
by reference, if requested by an Investor, and all exhibits and (iii)
upon the effectiveness of any Registration Statement, one copy of the
prospectus included in such Registration Statement and all amendments
and supplements thereto. The Company shall reasonably cooperate with
Legal Counsel in performing the Company's obligations pursuant to this
Section 3.
(d) The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge,
(i) promptly after the same is prepared and filed with the SEC, at
least one copy of such Registration Statement and any amendment(s)
thereto, including financial statements and schedules, all documents
incorporated therein by reference, if requested by an Investor, all
exhibits and each preliminary prospectus, (ii) upon the effectiveness
of any Registration Statement, ten copies of the prospectus included
in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Investor may
reasonably request) and (iii) such other documents, including copies
of any preliminary or final prospectus, as such Investor may
reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities owned by such Investor.
(e) The Company shall use its reasonable best efforts to (i) register and
qualify, unless an exemption from registration and qualification
applies, the resale by Investors of the Registrable Securities covered
by a Registration Statement under such other securities or "blue sky"
laws of all applicable jurisdictions in the United States, (ii)
prepare and file in those jurisdictions, such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness
thereof during the Registration Period, (iii) take such other actions
as may be necessary to maintain such registrations and qualifications
in effect at all times during the Registration Period, and (iv) take
all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(e), (y) subject itself to general taxation in
any such jurisdiction, or (z) file a general consent to service of
process in any such jurisdiction. The Company shall promptly notify
Legal Counsel and each Investor who holds Registrable Securities of
the receipt by the Company of any notification with respect to the
suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or "blue sky"
laws of any jurisdiction in the United States or its receipt of actual
notice of the initiation or threatening of any proceeding for such
purpose.
(f) The Company shall notify Legal Counsel and each Investor in writing,
including via facsimile or e-mail followed by overnight courier, of
the happening of any event, as promptly as practicable after becoming
aware of such event, as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue
statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (provided that
in no event shall such notice contain any material, nonpublic
information), and, subject to Section 3(r), promptly prepare a
supplement or amendment to such Registration Statement to correct such
untrue statement or omission, and deliver ten copies of such
supplement or amendment to Legal Counsel and each Investor (or such
other number of copies as Legal Counsel or such Investor may
reasonably request). The Company shall also promptly notify Legal
Counsel and each Investor in writing, including via facsimile or
e-mail followed by overnight courier, (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and
when a Registration Statement or any post-effective amendment has
become effective (notification of such effectiveness shall be
delivered to Legal Counsel and each Investor by facsimile or e-mail on
the same day of such effectiveness and by overnight mail), (ii) of any
request by the SEC for amendments or supplements to a Registration
Statement or related prospectus or related information, and (iii) of
the Company's reasonable determination that a post-effective amendment
to a Registration Statement would be appropriate.
(g) The Company shall use its reasonable best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any
of the Registrable Securities for sale in any jurisdiction and, if
such an order or suspension is issued, to obtain the withdrawal of
such order or suspension at the earliest possible moment and to notify
Legal Counsel and each Investor who holds Registrable Securities being
sold of the issuance of such order and the resolution thereof or its
receipt of actual notice of the initiation or threat of any proceeding
for such purpose.
(h) For the purposes of establishing a due diligence defense, at the
reasonable request of any Investor, the Company shall furnish to such
Investor, on the date of the effectiveness of the Registration
Statement and thereafter from time to time on such dates as an
Investor may reasonably request (i) a letter, dated such date, from
the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering,
addressed to the Investors, and (ii) an opinion, dated as of such
date, of counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the Investors.
(i) The Company shall make available for inspection by (i) any Investor,
(ii) Legal Counsel and (iii) one firm of accountants or other agents
retained by the Investors (collectively, the "INSPECTORS"), all
pertinent financial and other records, and pertinent corporate
documents and properties of the Company (collectively, the "RECORDS"),
as shall be reasonably deemed necessary by each Inspector in order to
enable it to exercise its due diligence responsibility, and cause the
Company's officers, directors and employees to supply all information
which any Inspector may reasonably request for the purpose of such due
diligence; provided, however, that each Inspector shall agree to hold
in strict confidence and shall not make any disclosure (except to an
Investor) or use of any Record or other information which the Company
determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the
disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement or is otherwise
required under the 1933 Act, (b) the release of such Records is
ordered pursuant to a final, non-appealable subpoena or order from a
court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the
public other than by disclosure in violation of this or any other
agreement of which the Inspector has knowledge. Each Investor agrees
that it shall, upon learning that disclosure of such Records is sought
in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow the
Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein (or in any other confidentiality
agreement between the Company and any Investor) shall be deemed to
limit the Investors' ability to sell Registrable Securities in a
manner which is otherwise consistent with applicable laws and
regulations.
(j) The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or
state securities laws, (ii) the disclosure of such information is
necessary to avoid or correct a misstatement or omission in any
Registration Statement, (iii) the release of such information is
ordered pursuant to a subpoena or other final, non-appealable order
from a court or governmental body of competent jurisdiction, or (iv)
such information has been made generally available to the public other
than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that
disclosure of such information concerning an Investor is sought in or
by a court or governmental body of competent jurisdiction or through
other means, give prompt written notice to such Investor and allow
such Investor, at the Investor's expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for,
such information.
(k) The Company shall use its reasonable best efforts either to (i) cause
all the Registrable Securities covered by a Registration Statement to
be listed on each securities exchange on which securities of the same
class or series issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the
rules of such exchange, or (ii) secure designation and quotation of
all the Registrable Securities covered by the Registration Statement
on The Nasdaq National Market, or (iii) if, despite the Company's
reasonable best efforts to satisfy the preceding clause (i) or (ii),
the Company is unsuccessful in satisfying the preceding clause (i) or
(ii), to secure the inclusion for quotation on The Nasdaq SmallCap
Market for such Registrable Securities and, without limiting the
generality of the foregoing, to use its reasonable best efforts to
arrange for at least two market makers to register with the National
Association of Securities Dealers, Inc. ("NASD") as such with respect
to such Registrable Securities. The Company shall pay all fees and
expenses in connection with satisfying its obligation under this
Section 3(k).
(l) The Company shall cooperate with the Investors who hold Registrable
Securities being offered and, to the extent applicable, facilitate the
timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be
offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may
be, as the Investors may reasonably request and registered in such
names as the Investors may request.
(m) If requested by an Investor, the Company shall (i) as soon as
practicable incorporate in a prospectus supplement or post-effective
amendment such information as an Investor reasonably requests to be
included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to
the number of
Registrable Securities being offered or sold, the purchase price being
paid therefor and any other terms of the offering of the Registrable
Securities to be sold in such offering; and (ii) as soon as
practicable make all required filings of such prospectus supplement or
post-effective amendment after being notified of the matters to be
incorporated in such prospectus supplement or post-effective
amendment.
(n) The Company shall use its reasonable best efforts to cause the
Registrable Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to consummate the disposition of such
Registrable Securities.
(o) The Company shall make generally available to its security holders as
soon as practical, but not later than 90 days after the close of the
period covered thereby, an earnings statement (in form complying with
the provisions of Rule 158 under the 0000 Xxx) covering a 12-month
period beginning not later than the first day of the Company's fiscal
quarter next following the effective date of the Registration
Statement.
(p) The Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC in connection with any
registration hereunder.
(q) Within two Business Days after a Registration Statement which covers
Registrable Securities is ordered effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to
deliver, to the transfer agent for such Registrable Securities (with
copies to the Investors whose Registrable Securities are included in
such Registration Statement) confirmation that such Registration
Statement has been declared effective by the SEC in the form attached
hereto as Exhibit A.
(r) Notwithstanding anything to the contrary herein, at any time after the
Registration Statement has been declared effective by the SEC, the
Company may delay the disclosure of material non-public information
concerning the Company the disclosure of which at the time is not, in
the good faith opinion of the Board of Directors of the Company and
its counsel, in the best interest of the Company and, in the opinion
of counsel to the Company, otherwise required (a "GRACE PERIOD");
provided, that the Company shall promptly (i) notify the Investors in
writing of the existence of material non-public information giving
rise to a Grace Period (provided that in each notice the Company will
not disclose the content of such material non-public information to
the Investors) and the date on which the Grace Period will begin, and
(ii) notify the Investors in writing of the date on which the Grace
Period ends; and, provided further, that no Grace Period shall exceed
30 consecutive days and during any 365 day period such Grace Periods
shall not exceed an aggregate of 45 days and the first day of any
Grace Period must be at least 2 trading days after the last day of any
prior Grace Period (an "ALLOWABLE GRACE PERIOD"). For purposes of
determining the length of a Grace Period above, the Grace Period shall
begin on and include the date the holders receive the notice referred
to in clause (i) and shall end on and include the later of the date
the holders receive the notice referred to in clause (ii) and the date
referred to in such notice. The provisions of Section 3(g) hereof
shall not be applicable during the period of any Allowable Grace
Period. Upon expiration of the Grace Period, the Company shall again
be bound by the first sentence of Section 3(f) with respect to the
information giving rise thereto unless such material non-public
information is no longer applicable. Notwithstanding
anything to the contrary, the Company shall cause its transfer agent
to deliver unlegended shares of Common Stock to a transferee of an
Investor in connection with any sale of Registrable Securities with
respect to which an Investor has entered into a contract for sale, and
delivered a copy of the prospectus included as part of the applicable
Registration Statement, prior to the Investor's receipt of the notice
of a Grace Period and for which the Investor has not yet settled.
4. OBLIGATIONS OF THE INVESTORS.
(a) At least five Business Days prior to the first anticipated filing date
of a Registration Statement, the Company shall notify each Investor in
writing of the information the Company requires from each such
Investor if such Investor elects to have any of such Investor's
Registrable Securities included in such Registration Statement. It
shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to
the Registrable Securities of a particular Investor that such Investor
shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it, as shall be
reasonably required to effect and maintain the effectiveness of the
registration of such Registrable Securities and shall execute such
documents in connection with such registration as the Company may
reasonably request.
(b) Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing
of any Registration Statement hereunder, unless such Investor has
notified the Company in writing of such Investor's election to exclude
all of such Investor's Registrable Securities from such Registration
Statement.
(c) Each Investor agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(g) or
the first sentence of Section 3(f), such Investor will immediately
discontinue disposition of Registrable Securities pursuant to any
Registration Statement(s) covering such Registrable Securities until
such Investor's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(g) or the first sentence of
Section 3(f) or receipt of notice that no supplement or amendment is
required. Notwithstanding anything to the contrary, the Company shall
cause its transfer agent to deliver unlegended shares of Common Stock
to a transferee of an Investor in connection with any sale of
Registrable Securities with respect to which an Investor has entered
into a contract for sale prior to the Investor's receipt of a notice
from the Company of the happening of any event of the kind described
in Section 3(g) or the first sentence of Section 3(f) and for which
the Investor has not yet settled.
5. EXPENSES OF REGISTRATION. All reasonable expenses, other than underwriting
discounts and commissions, incurred in connection with registrations,
filings or qualifications pursuant to Sections 2 and 3, including, without
limitation, all registration, listing and qualifications fees, printers and
accounting fees, and fees and disbursements of counsel for the Company
shall be paid by the Company. The Company shall also reimburse SFT I, Inc.,
a Delaware corporation, for the fees and disbursements of Legal Counsel
incurred in connection with registrations, filings or qualifications
pursuant to Sections 2 and 3 of this Agreement which amount shall be
limited to $15,000.
6. INDEMNIFICATION. In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
(a) To the fullest extent permitted by law, the Company will, and hereby
agrees to and does, indemnify, hold harmless and defend each Investor,
the directors, officers, partners, stockholders, employees, agents,
representatives of, and each Person, if any, who controls any Investor
within the meaning of the 1933 Act or the 1934 Act (each, an
"INDEMNIFIED PERSON"), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable
attorneys' fees, amounts paid in settlement or expenses, joint or
several, (collectively, "CLAIMS") incurred in investigating, preparing
or defending any action, claim, suit, inquiry, proceeding,
investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body
or the SEC, whether pending or threatened, whether or not an
indemnified party is or may be a party thereto ("INDEMNIFIED
DAMAGES"), to which any of them may become subject insofar as such
Claims (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in
any filing made in connection with the qualification of the offering
under the securities or other "blue sky" laws of any jurisdiction in
which Registrable Securities are offered ("BLUE SKY FILING"), or the
omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to
the effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under
which the statements therein were made, not misleading, (iii) any
violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the
offer or sale of the Registrable Securities pursuant to a Registration
Statement or (iv) any material violation of this Agreement (the
matters in the foregoing clauses (i) through (iv) being, collectively,
"VIOLATIONS"). Subject to Section 6(c), the Company shall reimburse
the Indemnified Persons, promptly as such expenses are incurred and
are due and payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any
such Claim. Notwithstanding anything to the contrary contained herein,
the indemnification agreement contained in this Section 6(a): (i)
shall not apply to a Claim by an Indemnified Person arising out of or
based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such
Indemnified Person or on behalf of such Indemnified Person expressly
for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to
Section 3(d); (ii) with respect to any preliminary prospectus, shall
not inure to the benefit of any such Person from whom the Person
asserting any such Claim purchased the Registrable Securities that are
the subject thereof (or to the benefit of any person controlling such
person) if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected in the prospectus, as then
amended or supplemented, if such prospectus was timely made available
by the Company pursuant to Section 3(d), and the Indemnified Person
was promptly advised in writing not to use the incorrect prospectus
prior to the use giving rise to a Violation and such Indemnified
Person,
notwithstanding such advice, used it or failed to deliver the correct
prospectus as required by the 1933 Act and such correct prospectus was
timely made available pursuant to Section 3(d); (iii) shall not be
available to the extent such Claim is based on a failure of the
Investor to deliver or to cause to be delivered the prospectus made
available by the Company, including a corrected prospectus, if such
prospectus or corrected prospectus was timely made available by the
Company pursuant to Section 3(d); and (iv) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf
of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.
(b) In connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the
same manner as is set forth in Section 6(a), the Company, each of its
directors, each of its officers who signs the Registration Statement
each Person, if any, who controls the Company within the meaning of
the 1933 Act or the 1934 Act (each, an "INDEMNIFIED PARTY"), against
any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as
such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that
such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for
use in connection with such Registration Statement; and, subject to
Section 6(c), such Investor will reimburse any legal or other expenses
reasonably incurred by an Indemnified Party in connection with
investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) and the agreement
with respect to contribution contained in Section 7 shall not apply to
amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent
shall not be unreasonably withheld or delayed; provided, further,
however, that the Investor shall be liable under this Section 6(b) for
only that amount of a Claim or Indemnified Damages as does not exceed
the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not
inure to the benefit of any Indemnified Party if the untrue statement
or omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the prospectus, as then amended or
supplemented.
(c) Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving
a Claim, such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to be made against any indemnifying party
under this Section 6, deliver to the indemnifying party a written
notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly
noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided,
however, that an
Indemnified Person or Indemnified Party shall have the right to retain
its own counsel with the fees and expenses of not more than one
counsel for such Indemnified Person or Indemnified Party to be paid by
the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel
of the Indemnified Person or Indemnified Party and the indemnifying
party would be inappropriate due to actual or potential differing
interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. In the
case of an Indemnified Person, legal counsel referred to in the
immediately preceding sentence shall be selected by the Investors
holding at least a majority in interest of the Registrable Securities
included in the Registration Statement to which the Claim relates. The
Indemnified Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of
any such action or Claim by the indemnifying party and shall furnish
to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action
or Claim. The indemnifying party shall keep the Indemnified Party or
Indemnified Person fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action,
claim or proceeding effected without its prior written consent,
provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall,
without the prior written consent of the Indemnified Party or
Indemnified Person, consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such Indemnified Party or Indemnified Person of a release from all
liability in respect to such Claim or litigation. Following
indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third Persons relating to the
matter for which indemnification has been made. The failure to deliver
written notice to the indemnifying party within a reasonable time of
the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action.
(d) The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or
Indemnified Damages are incurred.
(e) The indemnity agreements contained herein shall be in addition to (i)
any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii)
any liabilities the indemnifying party may be subject to pursuant to
the law.
7. CONTRIBUTION. To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however, that: (i) no person involved in the sale of Registrable
Securities which person is guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 0000 Xxx) in connection with such sale
shall be entitled to contribution from any person involved in such sale of
Registrable Securities who was not guilty of fraudulent misrepresentation;
and (ii) contribution by any seller of Registrable Securities shall be
limited in
amount to the net amount of proceeds received by such seller from the sale
of such Registrable Securities pursuant to such Registration Statement.
8. REPORTS UNDER THE 1934 ACT. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the 1933 Act or any
other similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without
registration ("RULE 144"), the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements and the filing of
such reports and other documents is required for the applicable
provisions of Rule 144; and
(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the
Company, if true, that it has complied with the reporting requirements
of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investors to
sell such securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights under this Agreement shall be
automatically assignable by the Investors to any transferee of Registrable
Securities if: (i) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished
to the Company within a reasonable time after such assignment; (ii) the
Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned; (iii) immediately
following such transfer or assignment the further disposition of such
securities by the transferee or assignee is restricted under the 1933 Act
and applicable state securities laws; (iv) at or before the time the
Company receives the written notice contemplated by clause (ii) of this
sentence the transferee or assignee agrees in writing with the Company to
be bound by all of the provisions contained herein; and (v) such transfer
shall have been made in accordance with the applicable requirements of the
Warrants.
10. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with
the written consent of the Company and Investors who then hold a majority
of the Registrable Securities. Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon each Investor and the
Company. No such amendment shall be effective to the extent that it applies
to less than all of the holders of the Registrable Securities. No
consideration shall be offered or paid to any Person to amend or consent to
a waiver or modification of any provision of any of this Agreement unless
the same consideration also is offered to all of the parties to this
Agreement.
11. MISCELLANEOUS.
(a) A Person is deemed to be a holder of Registrable Securities whenever
such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices
or elections from two or more Persons with respect to the same
Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the record owner of
such Registrable Securities.
(b) Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt,
when delivered personally (ii) one Business Day after deposit with a
nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
If to the Company:
Valence Technology, Inc.
0000 Xxxxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: President and CEO
If to Legal Counsel:
Xxxxxx Xxxxxx Xxxxxxxx LLP
000 X. Xxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
If to a Lender, to its address set forth on the Schedule of Lenders attached
hereto, with copies to such Lender's representatives as set forth on the
Schedule of Lenders, or to such other address and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party five days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication or (B) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service or receipt from a
nationally recognized overnight delivery service in accordance with clause (i)
or (ii) above, respectively.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
(d) All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal
laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New
York or any other jurisdictions) that would cause the application of
the laws of any jurisdictions other than the State of New York. Each
party hereby irrevocably submits to the non- exclusive jurisdiction of
the state and federal courts sitting the City of New York, borough of
Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing
a copy thereof to such party at the address for such notices to it
under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to
serve process in any manner permitted by law. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction
or the validity or enforceability of any provision of this Agreement
in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(e) This Agreement, the Loan Agreement and the Warrants constitute the
entire agreement among the parties hereto with respect to the subject
matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement, the Loan Agreement and the
Warrants supersede all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof and thereof.
(f) Subject to the requirements of Section 9, this Agreement shall inure
to the benefit of and be binding upon the permitted successors and
assigns of each of the parties hereto.
(g) The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(h) This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile or other electronic
transmission of a copy of this Agreement bearing the signature of the
party so delivering this Agreement.
(i) Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the
other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
(j) All consents and other determinations required to be made by the
Investors pursuant to this Agreement shall be made, unless otherwise
specified in this Agreement, by Investors holding at least a majority
of the Registrable Securities, determined as if all of the
Warrants then outstanding have been exercised for Registrable
Securities without regard to any limitations on exercises of the
Warrants.
(k) The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.
(l) This Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other
Person.
[Remainder of page intentionally left blank.
Signature page follows.]
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: LENDERS:
VALENCE TECHNOLOGY, INC. SFT I, INC.
By: /s/ Xxxxx X. Xxxxxxxxx By: /s/ Xxxx Xxxxxxxx
------------------------------ --------------------------------
Name: Xxxxx X. Xxxxxxxxx Name: Xxxx Xxxxxxxx
------------------------------ --------------------------------
Title: Vice President of Finance Title: Authorized Signatory
------------------------------ --------------------------------
SCHEDULE OF LENDERS
LENDER'S REPRESENTATIVE
LENDER ADDRESS AND ADDRESS
------ ------- -----------
SFT I, Inc. 1114 Avenue of the Americas Xxxxxx Xxxxxx Rosenman LLP
27th Floor 000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxxxxxx, Xxxxxxxx 00000-0000
Attention: President Attn: Xxxxxx X. Xxxxxxxx, Esq.
and
1114 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[Transfer Agent]
[Transfer Agent Address]
Re: VALENCE TECHNOLOGY
Ladies and Gentlemen:
We are counsel to Valence Technology, Inc., a Delaware corporation (the
"Company"), and have represented the Company in connection with that certain
Loan Agreement (the "Loan Agreement") entered into by and among the Company and
the lenders named therein (collectively, the "Holders") pursuant to which the
Company issued to the Holders warrants exercisable for shares of Company Common
Stock (the "Warrants"). Pursuant to the Loan Agreement, the Company also has
entered into a Registration Rights Agreement with the Holders (the "Registration
Rights Agreement") pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights
Agreement), including the shares of Common Stock issuable upon exercise of the
Warrants under the Securities Act of 1933, as amended (the "1933 Act"). In
connection with the Company's obligations under the Registration Rights
Agreement, on ____________ ___, 200_, the Company filed a Registration Statement
on Form S-_ (File No. 333-_____________) (the "Registration Statement") with the
Securities and Exchange Commission (the "SEC") relating to the Registrable
Securities which names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
[ISSUER'S COUNSEL]
By:
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